Oil rises 4% to a five-week high due to OPEC+ cuts

The prices of Petroleum rose nearly 4% to a five-week high on Friday, boosted again by the decision of the OPEC+ to make its biggest supply cut since 2020, despite concerns about a possible recession and rising interest rates.

Oil rose for a fifth day in a row despite a strengthening dollar, after data showed that the US economy continues to add jobs at a strong pace, giving the Federal Reserve a reason to continue with the sharp rises in interest rates.

A strong dollar can put pressure on demand for Petroleumbecause it makes it more expensive for buyers who use other currencies.

The futures of Brent rose $3.50, or 3.71%, to $97.92 a barrel, while US West Texas Intermediate crude (WTI) gained $4.19, or 4.74%, to $92.64.

Brent’s close was the highest since August 30 and WTI’s since August 29. The jump in prices pushed both benchmarks into technically overbought territory for the first time since August for Brent and since June for WTI.

Both contracts closed this week with their biggest weekly percentage gains since March, with Brent up nearly 11% and WTI up 17%.

The Organization of Petroleum Exporting Countries and its allies, including Russia, known as OPEC+, agreed this week to cut their output target by 2 million barrels a day.

“Among the main ramifications of OPEC’s latest cut is the likely return of oil to $100,” said Stephen Brennock of oil broker PVM.

UBS Global Wealth Management also projected that Brent “will move above the $100 per barrel mark in the coming quarters.”

The OPEC+ cut comes ahead of a European Union embargo on Russian oil and will reduce supply in an already tight market.

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